Question

what will be the journal entry of amount withdrawn for Rs 2000?

Answer 1

3 golden rules

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

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reason for debit and credit

If amount withdrawn for official use - 2 accounts affected

Cash A/c - Real A/c, cash comes into the company therefore its debited

Bank A/c - Personal A/c , Where banker give the money therefore its credited

If amount withdrawn for personal use ( owner) - 2 accounts affected

Drawings A/c - personal A/c , where owner receives the money therefore its debited

Bank A/c - Personal A/c , Where banker give the money therefore its credited

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Journal entry

If amount withdrawn for official use

Cash A/c    Dr     2000

     To bank A/c                   2000

(being cash withdrawn for official use)

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If amount withdrawn for personal use ( owner)

Drawings A/c   Dr  2000

       To Bank A/c                         2000

(being cash withdrawn for personal use)

Answer 2

Drawings A/C. Dr. Rs 2000

To Cash A/C. Rs 2000

(Being cash withdrawn)

Explanation

Cash is going out, hence credited

Drawings is an asset to the business, hence debited.